Why knowing your overheads, project pipeline and job duration could be the difference between profit and pain.
You’re Not Broke Because You’re Slow. You’re Broke Because You’re Blind.
It’s a story we’ve heard time and time again at The Good Builder:
A builder has a full pipeline. Jobs are moving. Staff are flat out.
But behind the scenes, cash flow is tight — and margins are disappearing faster than the site toilet rolls.
According to Mark from BuildMentor, it’s not a sales problem.
It’s a numbers problem.
“Sales is key,” Mark told us on The Good Builder Podcast.
“But knowing your numbers will set you free.”
The uncomfortable truth?
Many builders are pricing jobs using percentage margins without actually understanding their cost to serve.
And it’s costing them their business.
The Dangerous Illusion of Percentages
Here’s the issue Mark sees again and again.
Builders set a percentage markup — say 20% — and apply it across all jobs.
Small job? 20%. Big job? 20%. Seems fair, right?
Wrong.
“Two jobs can sit in your system for the same amount of time,” Mark said.
“But if one’s worth $80,000 and the other $300,000, the small one might end up costing you money.”
The reason is simple: your overhead doesn’t scale with the job size.
If you’ve got admin wages, rent, supervisor costs and vehicles ticking away each month — every job in progress is dragging some of that cost with it.
If you don’t know how much that is, you’re flying blind.
The 3 Numbers Every Builder Must Know
Mark laid it out like this: forget percentages for a moment. Instead, figure out these 3 things.
1. Your True Monthly Overhead
“Go back three months and pull your P&L,” Mark said.
“Strip out anything you’ve already priced into jobs — what’s left is your true monthly overhead.”
That includes:
- Rent
- Admin staff wages
- Vehicles
- Subscriptions
- Office costs
It doesn’t include things like commission-based sales or job-specific trade costs — those should already be inside your quotes.
Mark’s tip? Use a 3-month average to smooth out any spikes.
2. How Many Jobs You Have On At Once (On Average)
“This isn’t how many you sell per year,” Mark explained.
“It’s how many are in the system at once — from contract signing to handover.”
Think of it like this:
If your monthly overhead is $20,000, and you typically run 5 jobs at once, then each job is carrying $4,000 per month in overhead costs.
3. How Long Jobs Stay in Your System
This is the kicker.
“You need to count the whole timeline — including contract prep, council, admin, site, and handover,” said Mark.
“Some builds sit in your system for 10–12 months before they’re finished.”
If your average job stays in your system for 6 months, and each job costs you $4,000/month in overhead…
Then each job is costing you $24,000 just to run.
That’s before you’ve made a cent in profit.
So… What’s Your Real Break-Even Point?
Let’s run the numbers:
- Monthly Overhead: $20,000
- Average Jobs in System: 5
- Overhead Per Job Per Month: $4,000
- Average Job Duration: 6 months
- Overhead Per Job = $24,000
Which means… if you price a job to make $24K gross profit, you’ve just broken even.
“If you want to actually make money, you need to be targeting double that,” Mark advised.
“BuildMentor’s general rule is: if a job will cost you $24K to run, aim for at least $48K in gross profit.”
This Isn’t Greedy — It’s Survival
One of the biggest blockers to this mindset is builder guilt.
“I can’t charge that much.”
“My competitors will undercut me.”
“Clients will walk.”
But ask yourself — what’s worse?
👉 Looking expensive but staying in business?
👉 Or looking cheap… and going broke halfway through the job?
“It’s not about price gouging,” Mark said.
“It’s about protecting your business, your team, and your clients.”
Real Talk: Builders Are Subsidising Their Small Jobs
The trap of using % markup across the board is that larger jobs often subsidise smaller ones.
If a $90K job sits in your system for 10 months, and you only added 20% — you’ve probably lost money.
If it runs late, you’ve definitely lost money.
“You need to get serious about cost-to-serve,” Mark said.
“Every day that job stays open is costing you rent, wages, and time.”
What Should You Do Next?
Here’s a practical 3-step plan based on Mark’s advice:
✅ Run a 3-month P&L
Strip out any job-specific costs and figure out your true overhead.
✅ Count your average workload
How many jobs do you typically have running at once?
✅ Estimate job durations
Look at the average from contract signing to handover.
From there, you can calculate your break-even cost per job — and make smarter margin decisions that actually protect your bottom line.
Final Word
You don’t need to become an accountant. But you do need to run your building company like a business — not a blind hustle.
“Sales feed you,” Mark said.
“But knowing your numbers will save you.”
Start tracking these 3 numbers today — and if you need help, reach out to the BuildMentor team.
Stay on top of your game.
Subscribe to our newsletter to keep up-to-date with more tips like this and to know when our top stories will be featured.
0 Comments